Tax Credit Affirms Parents as Primary Educators
Donors can claim up to $3,400 in federal tax credits as roughly $26 billion in K-12 scholarships is projected over three years in participating states.
A new federal tax credit is set to channel private donations into K-12 scholarships available at Catholic and other schools, after the U.S. Department of the Treasury advanced rules for the first nationwide school choice program of its kind.
On October 1, the Treasury issued proposed regulations detailing how the credit—established in 2025 legislation—will operate. Individual donors can receive a dollar-for-dollar federal tax credit of up to $1,700 for gifts to scholarship-granting organizations; married couples filing jointly can claim up to $3,400. The funded scholarships may cover tuition, tutoring, school supplies, and homeschooling expenses.
Students enrolled in public, private, and religious schools become eligible in states that choose to participate. The Federation for Children estimates that 91.7 percent of U.S. students would qualify, or roughly 51.7 million children nationwide. Catholic leaders note that the program often carries no income caps, widening the reach beyond traditional need-based aid.
A Transformative Opportunity, Bishops Say
Bishop David O’Connell, who chairs the Committee on Catholic Education of the U.S. Conference of Catholic Bishops, has described the credit as a "transformative opportunity" for children across the country. He stressed that the policy affirms parents as the primary educators of their children—a foundational teaching of the Church.
Projections anticipate about $26 billion in contributions over three years. For Catholic schools, already sustained by the sacrifices of families, parishes, and religious orders, that volume of scholarship money could open seats to many more students seeking an education rooted in the faith.
States Hold the Key
The framework is voluntary for states. On October 9, New York announced it would opt in, allowing its residents to benefit. Families living in states that do not join will not receive scholarships financed through the federal credit.
Unlike a direct government voucher, the measure multiplies private charity by offsetting the tax cost of designated gifts. Catholic educators see in it a practical recognition that parents, not the state, hold first responsibility for the schooling of their children.
The proposed Treasury regulations clarify implementation steps for donors and scholarship organizations as the program moves forward. With billions potentially at stake and a large majority of American students theoretically eligible, state decisions will determine how widely the opportunity spreads.